Health Industry Washington Watch : Washington DC Healthcare Industry Law Firm : Reed Smith : Health Industry Washington Watch : Regulations, Medicare/Medicaid, Governmental Organizations

On August 22, 2011, HHS and the Departments of Labor and Treasury published two proposed rules designed to help consumers understand and evaluate their health insurance options, as mandated by the ACA.  The first rule would require health plans and issuers to provide consumers with a Summary of Benefits and Coverage (SBC) under circumstances set forth in the proposed rule. Health plans and issuers would be required to provide notice at least 60 days before any significant modification is made in the plan or coverage during the year. The regulation also would establish a uniform glossary of terms commonly used in health insurance coverage (e.g., coinsurance, deductible, excluded services, out-of-network). Second, the Departments have proposed templates and instructions to be used in making required disclosures under the SBC rule. Comments on both proposals are due by October 21, 2011.

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On August 1, 2011, HHS announced that health plans will be required to furnish certain preventive health services for women without cost sharing under the Affordable Care Act, effective for plan years beginning on or after August 1, 2012. The eight additional preventive services for women were recommended by the Institute of Medicine on July 19.

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Several Congressional committees have scheduled hearings next week on the ACA:

• On March 15, the House Oversight and Government Reform Health Care Subcommittee is holding a hearing entitled “Obamacare: Why The Need For Waivers?"
• On March 16, the Senate Finance Committee is holding a hearing on "Health Reform: Lessons Learned During the First Year." HHS Secretary Kathleen Sebelius is scheduled to testify. 
• On March 17, the Senate Health, Education, Labor and Pensions Committee will examine "Health Insurance Exchanges and Ongoing State Implementation of the Affordable Care Act."

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On November 30, 2010, the Senate Judiciary Crime and Drugs Subcommittee is holding a hearing on "Examining Enforcement of the Foreign Corrupt Practices Act." On December 1, the Senate Commerce, Science and Transportation Committee is holding a hearing entitled "Are Mini Med Policies Really Health Insurance?" Also on December 1, the Senate Health, Education, Labor and Pensions Committee is scheduled to vote on a number of health policy bills, including: H.R. 2941, to reauthorize and enhance Johanna's Law to increase public awareness and knowledge with respect to gynecologic cancers; S. 3199, the Early Hearing Detection and Intervention Act; and S. 3036, the National Alzheimer's Project Act. This markup previously was scheduled for November 17.

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The Department of Health and Human Services (HHS) has added price estimates for private health insurance policies on its consumer website in an effort to make health insurance market data more transparent.

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On July 23, 2010, the Obama Administration published an interim final rule with comment period implementing ACA requirements regarding internal claims and appeals and external review processes for group health plans and health insurance coverage in the group and individual markets. The rules generally apply to plan/policy years beginning on or after September 23, 2010. Comments will be accepted until September 21, 2010. In addition, on July 19, 2010, HHS, along with the Departments of Treasury and Labor, published an interim final rule implementing ACA requirements that group health plans and health insurance issuers provide preventive benefits coverage. The rule also prohibits the imposition of cost-sharing requirements for certain preventive health services. The rules generally apply to plan/policy years beginning on or after September 23, 2010. Comments will be accepted until September 17, 2010.

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Under the ACA, certain group health plans and health insurance coverage existing as of March 23, 2010 (the date of enactment of the ACA), are considered “grandfathered” and excused from complying with some of the ACA’s health care improvement and market reform provisions. On June 17, 2010, the Department of Health and Human Services (HHS) and the Departments of Labor and Treasury published interim final rules on the "Status as a Grandfathered Health Plan under the Patient Protection and Affordable Care Act." Among other things, the rule establishes the circumstances under which plan sponsors may adjust co-payments, deductibles and employer contributions to their employees' premiums without forfeiting their grandfather status. For instance, as described in greater detail in the regulation, grandfathered plans may adjust costs to keep pace with medical inflation, add new benefits, make modest adjustments to existing benefits, voluntarily adopt certain new consumer protections, or make changes to comply with state or other federal laws. Plans will lose their grandfathered status, however, if they make major changes, such as significantly cutting or reducing benefits; significantly raising coinsurance, copayments, or deductibles; significantly lowering employer contributions or caps on payments for covered services; or changing insurance companies (with certain exceptions). The interim final rule is effective June 14, 2010, with certain exceptions, and comments will be accepted until August 16, 2010. HHS has posted a fact sheet summarizing the grandfathered health plan rule. 

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On June 7, 2010, CMS announced the availability of $51 million in Affordable Care Act Health Insurance Premium Review Grants, the first round of grants under a new $250 million ACA grant program intended to strengthen insurance rate review processes. To be eligible for a $1 million first round grant, a state must submit a plan for how it will use grant funds to develop or enhance its process of reviewing and approving, disapproving, or modifying health insurance premium requests.

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On May 28, 2010, the House of Representatives approved an amended version of H.R. 4213, "The American Jobs and Closing Tax Loopholes Act of 2010.” The legislation would avert a more than 21% cut in Medicare physician fee schedule (MPFS) payments that went into effect June 1, 2010 under the statutory sustainable growth rate (SGR) formula (although CMS is exercising its authority to hold claims for the first 10 business days of June while legislative action is pending to avoid applying the negative update). Under the House bill – which still awaits Senate action -- MPFS rates would be increased by 2.2% for the rest of 2010 and by 1% in 2011, but there would be no relief from the SGR formula for 2012 or thereafter (the Congressional Budget Office estimates that in 2012, rates would be cut by about 33% in the absence of yet another legislative fix). The House bill also would, among other things: expand eligibility for the 340B drug discount program; repeal the delay in the use of RUG-IV for purposes of the Medicare SNF PPS; tighten restrictions on inpatient hospital billing under the “3-day payment window”; and establish a CMS-IRS data match to identify fraudulent providers. The House dropped from its package a 6-month extension of a temporary increase in the federal Medicaid matching rate and an extension of premium assistance for COBRA benefits to reduce the cost of the package. The prospects for Senate action on H.R. 4213 are still uncertain due to concerns that the new spending in the bill still is not fully offset by cuts, so additional shorter-term extensions of the previous physician fee schedule freezes are possible.

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Congressional leaders have been seeking support for a jobs bill with a number of Medicare and other health policy provisions, but to date have been unable to muster the necessary votes for passage before the Congressional Memorial Day break due to concerns about the cost of the package. Among other things, H.R. 4213, "The American Jobs and Closing Tax Loopholes Act of 2010,” would avert a more than 21% cut in Medicare physician fee schedule (MPFS) payments scheduled to take effect June 1, 2010 under the statutory sustainable growth rate (SGR) formula. Instead, Congressional leaders are proposing to increase MPFS rates by 2.2% for the rest of 2010 and by 1% in 2011, but would provide no relief from the SGR formula for 2012 or thereafter. The legislation also would, among other things: extend for 6 months a temporary increase in the federal Medicaid matching rate; expand eligibility for the 340B drug discount program; repeal the delay in the use of the Resource Utilization Groups (RUG IV) for purposes of the Medicare skilled nursing facility (SNF) prospective payment system (PPS); tighten restrictions on inpatient hospital billing under the “3-day payment window”; establish a CMS-IRS data match to identify fraudulent providers; and extend premium assistance for COBRA benefits.  Note that the legislative situation is very fluid, and leaders may revise the package further, including possibly holding a separate vote on the MPFS fix provision. Given the uncertainties of the Congressional outlook, CMS has ordered contractors to hold MPFS claims for the first 10 business days of June (CMS expects the hold to have minimum impact on provider cash flow since clean electronic claims are not paid before 14 calendar days after receipt).

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Today the Obama Administration released an 11-page summary of its health reform proposal in preparation for a bipartisan health reform summit scheduled for February 25, 2010. Among other things, the proposal includes a relatively-detailed discussion how the Administration would promote access to affordable insurance, address health care fraud and abuse proposals, and bridge the differences between the House and Senate reform proposals in other key areas. Items of note include the following:

• Access to Health Insurance – The Administration proposes expanding access to affordable insurance through a series of insurance market reforms, including an insurance purchasing pool; federal premium subsidies; a requirement that individuals buy insurance or pay a penalty (with exceptions); a requirement that employers defray costs employees receiving federal subsidies (with exceptions); expansion of Medicaid; and a new Health Insurance Rate Authority to provide federal assistance and oversight to states in conducting reviews of unreasonable rate increases and other insurance industry practices. There is no mention of establishing a public health insurance plan to compete with private insurers.
• Waste, Fraud and Abuse – The Presidential proposal includes a variety of program integrity provisions, which include: a comprehensive sanctions database; registration and background checks of billing agencies and individuals; expanded access to the Healthcare Integrity and Protection Data Bank; liability of Medicare administrative contractors for claims submitted by excluded providers; strengthened standards for facilities that seek reimbursement as community mental health centers; limiting debt discharge in bankruptcies of fraudulent health care providers or suppliers; expanded use of technology for real-time data review; sanctions for illegal distribution of a Medicare or Medicaid beneficiary identification or billing privileges; a study of universal product numbers/claims forms for selected items and services under the Medicare program; a state Medicaid prescription drug profiling requirement; extrapolation of Medicare Advantage risk adjustment errors to contract payment for a given year; modification of certain Medicare medical review limitations; establishment of a CMS-IRS data match to identify fraudulent providers; and prevention of delays in access to generic drugs.
• Cost-Containment Provisions – While the summary document does not include a detailed discussion of Medicare provider rate changes, it does include a limited number of cost containment/fiscal sustainability provisions, including: an adjustment in Medicare Advantage payments to reflect “unjustified coding patterns”; an excise tax on the most expensive health plans ($27,500 for a family plan) beginning in 2018 for all plans; and new Medicare Hospital Insurance taxes on high-income taxpayers.
• Industry Fees -- The President proposes a $33 billion fee on brand name pharmaceutical manufacturers over 10 years (up $10 billion from Senate plan), beginning in 2011; a $67 billion assessment on health insurers over 10 years beginning in 2014 (with certain exceptions); and an excise tax (rather than fee) on medical device manufacturers, raising $20 billion over 10 years, starting in 2013.
• Quality of Care – Although not discussed in the summary document, a separate description on the White House web site states the President’s plan would provide “incentives for doctors, and hospitals that improve quality while providing for better coordination that helps to reduce harmful medical errors and healthcare-acquired infections.” The plan also includes “innovative payment reforms so providers are rewarded for the quality of care they provide, rather than just additional tests or treatments.” Likewise, it would reward greater coordination of care between primary care providers and specialists.
• Part D Coverage Gap – The President’s proposal fills the Medicare Part D prescription drug "doughnut hole" by providing a $250 rebate to Medicare beneficiaries who reach the coverage gap in 2010, and then phasing down the coinsurance requirement so it is the standard 25 percent by 2020 throughout the coverage gap.
• Medicaid Matching Funds – The President would eliminate the Senate’s proposed enhanced Medicaid matching provision for Nebraska and instead provide additional federal financing for all states to support the expansion of Medicaid.
• CLASS Act – The White House endorses the Community Living Assistance Services and Supports (CLASS) Program, a voluntary, privately-funded long-term services insurance program, but makes a series of changes designed to “improve the CLASS program’s financial stability and ensure its long-run solvency.”

The Administration also has released a variety of background and summary documents on the White House Health Care Meeting website.

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